Author: Mariam Chalak

Fixed term contracts are regularly used by employers. However, employers are now required to only use fixed term contracts under certain circumstances. The Fair Work Amendment (Secure Jobs, Better Pay) Act 2022 (Cth) (the Act) came into force on 7 December 2022 and has introduced a number of changes to the Australian industrial landscape

Changes introduced by the Act

• Employers are now prevented from including ‘pay secrecy’ clauses in their employment agreements. Employees cannot be prevented from disclosing their salary to colleagues. It is important that all employers update their employment agreements (for all existing and prospective staff) to reflect this change as remuneration is commonly defined as ‘confidential information’.
• Stronger protections against sexual harassment in the workplace, including the implementation of the 28 recommendations from the Respect@Work report. You can read more about the Respect@Work changes here.
• Stronger protections in relation to flexible work arrangements.
• Limiting the circumstances in which fixed term contracts can be used. We discuss changes to the use of fixed term contracts below.

You can read about the other changes introduced by the Act here.

• The use of fixed term contracts has increased by 50% since 1998;
• More than half of fixed term contracts have been entered into with women; and
• More than 40% of employees on fixed term contracts have been employed for a period greater than two years.

The termination of a fixed term contract will generally mean that the employee is not entitled to notice, redundancy pay and other benefits under the Fair Work Act 2009 (Cth). In short, the improper use of fixed term contracts has undermined job security, particularly for women.

Fixed term contracts cannot be used if:

• The period of employment for a permanent employee is greater than two years; or
• The contract can be renewed so that the period of employment will be greater than two years; or
• The contract provides the parties with an option to renew more than once; or
• Where the employee has entered into consecutive contracts in the following circumstances:
  • The previous contract provides that the contract will terminate at the end of a fixed term; and
  • The previous contract was for the employee to perform the same, or substantially similar work under the new contract; and
  • There is substantial continuity of the employment relationship between the previous contract and the new contract; and
  • Either of the following apply:
    • The term of the previous contract and the new contract is greater than two years; or
    • The previous contract and the new contract contain an option to renew.

• To perform a distinct and identifiable task requiring a specialised skillset;
• In relation to a training arrangement;
• To perform essential work during a period of peak demand;
• To perform work during emergency circumstances or during a period of temporary absence of another employee;
• The employee earns above the high-income threshold in the year that the contract is entered into;
• The contract relates to the performance of work that is funded (in whole or part) by the government. However, the funding must fulfil certain criteria; or
• The contract relates to a governance position that has a time limit under the governing rules of the employer.

• Redundancy and notice pay;
• The right to file an unfair dismissal claim; and
• Other accrued statutory entitlements.

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